HMRC have published a brief on the implications of last years Skandia judgment on the UK VAT grouping rules. The conclusion is that they don’t have a great impact as Swedish VAT groups are rather different from UK groups. In the UK if a UK branch of an overseas company VAT groups with a UK company then the entire overseas company is within the group. This means that any charges made between the company headquarters and the branch are outside the scope of VAT – being intra VAT group.

In Sweden the rules are different. Only the Swedish branch (the establishment only) of the overseas company is within the VAT group . This means that where the headquarters supplies the branch there is a supply for VAT purposes. The ECJ in accepting this treatment was confirming that Swedish VAT law has this consequence and not that other member states that operate different VAT group rules such as the UK are wrong.

The judgement therefore might have an impact if you are a UK establishment that is part of a Swedish VAT group , or similar but not really otherwise.

The brief can be found at: https://www.gov.uk/government/publications/revenue-and-customs-brief-2-2015-vat-grouping-rules-and-the-skandia-judgment/revenue-and-customs-brief-2-2015-vat-grouping-rules-and-the-skandia-judgment